EKIP– Expert Club for Economics and Politics A Different Opinion
Дъглас Расмусен[1]
It is often said that markets are guided “as if by an invisible hand” to create order and cooperation among people. Markets achieve this harmonious result through the motives and mutual interest of each person. But there is another, “older” method of organizing people, namely the way of building society around the concepts of “good” and “bad”. This is the path of ethics. Ethics, unlike the market, builds organization among people around autocratic orders and directives.
This raises the question: how can a self-regulating market and a spontaneous market order depend on ethics at all? Does it make sense to promote ethics in systems that arise spontaneously and that regulate themselves? Aren't the market and ethics two opposing, not complementary, principles of organization?
The visible hand of ethics and the invisible hand of the market
The free market order does not use ethics to solve the problem of coordinating people in society. In most cases, we do not even know the people we interact with to be able to make ethical judgments about them. This “impersonality” is certainly a good thing. We can interact with and benefit from many people without having to worry about whether they share our views of right and wrong, or whether our principles are the same. In the market, we trade, deriving mutual benefit from the trade, and then everyone goes their separate ways.
For this reason, some people believe that the market order is at best amoral and at worst immoral. Others even still embrace the idea that markets produce “chaos” and insist on using moral directives as the basis for social interaction. This certainly brings ethics into our view, but the entire argument is based on the assumption that markets produce chaos. So let’s stick to the idea that markets can coordinate people’s actions flawlessly, based on the common good and mutual consent. If this is true, then what is the point of ethics? And if ethics does have any use, isn’t it of little importance to a market order?
First, we know that we cannot let people do whatever they want in any social order. We should not be able to establish the company Murder Inc. It seems that even in a free market there must be certain rules. This suggests that ethics has a role in establishing these rules from the beginning. But why then should we not let everything be regulated by ethics? Why do we invoke ethics in individual cases and not in all? We might say that we stop using ethics where the self-interest of the participants begins to work better than the commands given by its visible hand. This conclusion, unfortunately, leads us to a dead end when we try to figure out how to proceed.
For example, on one side we can put people who are less interested in which system works, but who want to make sure that everyone is doing the “right thing.” On the other side are those who are interested in what works in practice, but who disagree about what works best. Finally, with the exception of the minority who completely deny the market, there is the group of those people who believe that the market can only work in certain limited areas and that ethics is the best way to organize people. They are all opponents of the freedom offered by the market, and it seems that if we choose the opposite option (in which the market dominates), it would automatically be assumed that we are encouraging a culture of self-interest instead of one of ethical responsibility, since ethics in general seem almost irrelevant to the day-to-day actions of the market.
However, we believe that this apparent “ignorance” of ethics is not only justified, but even makes it more respected. In a sense, less is more. Less obedience to commands and directives at the public level would mean greater respect for ethics in general. We are not saying that the freedom of the market will make people more ethical. We may think that this is possible and even true, but our idea is different. Our thesis is that this way of organizing society – providing simple rules to people who are free to interact with each other on the basis of their personal interests, plans or projects – gives ethics an enormous importance in society. By “enormous importance” we do not mean that we will necessarily witness much more ethical behavior or that society will function better. We mean that under simple general rules, society will give ethics a much more important role.
Ethical principles – formation
In this regard, there are two possible paths. Either society will be organized around a few ethical principles or a “package” of them, in which case the goal of individuals in society will be to live by them, or people will have to choose a few fundamental principles, and the rest will be able to follow their own principles in addition to them. It is clear that the market society is an example of the second scenario. Of course, this raises the question: which principles should be central and why?
Perhaps we should rephrase this question. Rather than assuming that everyone knows what ethics and politics are, let’s ask some basic questions. For example, what are ethics? We define “ethics” as the process by which people determine how they should live. More specifically, ethics suggests what actions a person should take in order to live well. When we formulate this definition of ethics, it becomes clear that what is right for one person is not necessarily right for another. If this is true, then the market order allows for and encourages pluralism in ways of living. This is not our main idea, but it is important to consider when we talk about ethics and markets. If there is more than one way to live well, it follows that the market is perhaps the best organizing principle that recognizes this truth.
Of course, one may not live well even with pluralism and freedom. The market order may allow one to abuse or to abdicate one's responsibility to live well. So it seems that the market is neither a supporter nor an opponent of the good life. It can be used in both ways by each individual. But this answer does not help us to solve the problem we have been focusing on. This is because if we ask ourselves what ethics is, then perhaps we should also ask ourselves what the social problem is that we are trying to solve and that has raised the question of ethics in the first place. We already know part of the answer: we need some rules in order to be able to live among other people.
But in light of what we have said, these rules must meet two characteristics at the same time. First, they must be equally applicable to everyone in society. It is unacceptable that they should apply to some people and not to others. At the same time, the rules must apply to everyone, but also take into account the fact that there are different ways of living well. This means that ethical norms must take into account the pluralism that we mentioned above, while at the same time continuing to treat everyone equally. We cannot afford to fall back into the trap of trying to force everyone to live in the same way. This will destroy the diversity necessary to achieve ethical pluralism, which the market generously allows us to develop. We cannot take a position that denies the basic rules. We must look at the general and the specific at the same time, regardless of which guiding principle society chooses.
We still seem to be at an impasse. What kind of rules or principles can be applied to everyone, to provide a plurality of forms of the good life, and at the same time not push us towards one type of life at the expense of another?
Different types of ethical principles?
Before answering this question, we need to consider another possibility. Perhaps not all ethical principles are of the same type. It is possible that some principles are of one type and some of another, and only some are relevant to the problem we are considering. Another way to put the question is to assume that some principles are suitable for solving the problem of how to live among others, while others provide an answer to the question of how to live well. But this may not be entirely true, because the good life is possible only when we are surrounded by other people. Perhaps then we should turn to principles that take into account the very possibility of a good life among others, and principles that relate to a good life, including when we are among other people. If you are open to this idea, you are already ready to see the solution to the problem.
What is then something that: a) is applicable to everyone; b) is applicable in every ethical situation; c) does not push society towards one way of life or another; e) is something in which each of us finds our ethical interest when acting? Is it possible to have such a principle at all?
We think this is the principle of “self-direction.” Specifically, the ethical principle is that the first principle of public order should be to protect the right to self-direction. By “self-direction” we do not mean anything complicated, but simply the right to freely choose one’s course of action. One does not need to be autonomous—that is, to have all the relevant information and the ability to reason—nor to be able to make the right decisions. One simply needs to have the ability to choose, regardless of the system of constraints one faces. Our understanding of self-direction is so simple because, for any action to be considered ethical, it must be done through free choice and carry with it responsibility. If the individual does not make his or her choices freely, or is responsible for his or her decisions only if he or she has made them with full information and godlike knowledge of the situation, then there would be no ethics.
The most obvious and common way to limit self-direction is to use physical force. There may be other ways, but this is the most recognizable and most easily preventable. Since our principle must be general and public, it must be easily identifiable, and not too detailed or obscure. Common crimes such as theft, rape, murder, assault, fraud, and the like meet these criteria quite well. If we do not allow these things in society, there is a high probability that people will self-direct themselves en masse (i.e., engage in self-direction).
By defending people's self-direction, we are not trying to make them good or to increase the effectiveness of their action. In fact, by defending the right to self-direction, we are trying to give ethics a chance. If we believe, as we do, that self-direction is the basis of every action that we call ethical, then the surprising conclusion is that in a market system in which freedom is highly valued, we actually give ethics and ethical behavior the greatest chance!
But the mere defense of self-government does not mean that we will have a fully ethical society. Its existence depends on people exercising their freedom ethically. Note that if you do not use yours ethically, that does not prevent me from using mine, because what we are defending is the right to self-government, not specific forms of self-government. Note also that if we try to impose anything more than the right to self-government, there is a good chance that we will thereby push individuals towards some specific kinds of self-government and turn them away from others. It seems that we must either embrace freedom fully as a guiding social principle or reject it altogether. But if we reject it, the surprising conclusion would be that we thereby abandon the main criterion by which an action can be considered ethical. In other words, we must have one ethical principle in mind in order to defend another ethical principle – in this particular example, we must defend what is fundamental to all other actions in the social context. If we switch priorities, we will find ourselves destroying the foundations of ethics.
Making ethical action possible
It seems as if market societies are indifferent to ethics, but if this is true, it is true because only they distinguish between ethical principles that make ethical action in society possible and ethical principles that tell us what we should do to live well or to fulfill a certain commitment to ourselves or others. This is just another way of saying that the market order should not be understood as an ethical philosophy– and for good reason. It is not a philosophy of ethical living. It simply needs to be established to ensure the possibility of ethical behavior. Our attempts to achieve more will only harm this fundamental goal. This may be far from a philosophy of life, but it is in harmony with the truth that the good life can only be achieved by people who are responsible for their own actions.
We can conclude that the liberal market order leads to a recognition of the centrality of self-direction to morality and hence the importance of the need to defend it. This recognition will naturally manifest itself as a suspicion of any attempt to replace self-direction with some other pre-ordained moral trajectory, no matter how attractive it may seem. The norms that protect self-direction can only be changed in its name, otherwise it must be left alone to be enforced. The hidden wisdom of classical liberalism and the reason for its incredible success in practice is the insight that the less ethics are subject to politics, the more they will flourish in a society. While there is solid evidence to support the argument that the liberal order increases human well-being, it seems to remain invisible that it allows for something deeper and more important. Liberal organization allows individuals to be human and, more precisely, to use their specifically human qualities—to reason, to judge, and to feel social concern—when they shape their goals and the methods for achieving them. The market order is then not a dehumanizing institution, but the most humane and ethical of all.
The original text in English can be found here.
[1] Douglas Rasmussen (born 1948) is a professor of philosophy at St. John's University, where he has taught since 1981. His publications can be found here.
